Suppose that a bank has $100 million in checkable deposits and the required reserve ratio is 0.1. If… Show more Suppose that a bank has $100 million in checkable deposits and the required reserve ratio is 0.1. If the bank has $5 million in excess reserves, then its actual reserves must be? When the Fed buys U.S. government securities from a member bank, the immediate effect on that member bank’s balance sheet is? Exhibit 15-3 LEFTBANK LEFTBANK LEFTBANK LEFTBANK Assets Assets Liabilities and Net Worth Liabilities and Net Worth Deposits with the Fed -$10,000 U.S. Government securities +$10,000 Refer to Exhibit 15-3. Leftbank’s total reserves Answer Exhibit 15-3 LEFTBANK LEFTBANK LEFTBANK LEFTBANK Assets Assets Liabilities and Net Worth Liabilities and Net Worth Deposits with the Fed -$10,000 U.S. Government securities +$10,000 Refer to Exhibit 15-3. Leftbank’s total reserves Answer Selected Answer: 7. Suppose that partners Kemp and Sam open a goldsmith shop and general store in the Wild West. The more rapidly people “cash in” their bank notes, a. the higher their profit from making loans will be b. the lower their profit from the goods in the store c. the fewer bank notes they will be able to issue d. the larger the denominations in which they will have to issue bank notes e. the smaller their reserve ratio Selected Answer: 7. Suppose that partners Kemp and Sam open a goldsmith shop and general store in the Wild West. The more rapidly people “cash in” their bank notes, a. the higher their profit from making loans will be b. the lower their profit from the goods in the store c. the fewer bank notes they will be able to issue d. the larger the denominations in which they will have to issue bank notes e. the smaller their reserve ratio • Show less
